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JewishJournal.com

May 24, 2001

Tax Plan Could Endanger Services

http://www.jewishjournal.com/world/article/tax_plan_could_endanger_services_20010525

This week congressional Republicans tried to put the finishing touches on a compromise version of President George W. Bush's giant tax cut that some Jewish leaders say could ravage a wide range of health and social service programs serving the community's neediest citizens.

But few Jewish groups are going public with their objections to the $1.3-trillion, 11-year tax package -- which administration officials say will spur the economy to new heights, but critics contend is based more on wishful economic thinking than solid projections.

The reason for the deafening silence from most Jewish groups is simple, said an official with one organization that is watching from the sidelines: "Access and donors. While we have real concerns about the impact of this tax policy down the road, many big contributors favor it."

And Jewish groups are eager to establish good relations with the new administration; taking up a hopeless battle against tax cuts isn't the way to do that, their leaders say.

Not so reticent are the National Council of Jewish Women (NCJW) and the Religious Action Center of Reform Judaism (RAC), which are lobbying against what they term a reckless and unfair tax cut.

"It will decimate social programs," said Sammie Moshenberg, NCJW's Washington director. "We're very concerned it will breed fiscal problems in the years to come that will work themselves out on the backs of the nation's most vulnerable citizens."

Critics charge that the Republican Congress and the administration have included provisions that would lock the massive tax cut in place and make it extraordinarily difficult for later Congresses to reverse.

According to some estimates, nondefense spending will sink to its lowest level in more than 50 years when the tax plan is fully implemented.

Moshenberg said that the impact will be felt most dramatically by women and children; other Jewish activists are particularly concerned about always-vulnerable programs for the elderly and for immigrants and refugees.

And the prospect of a budget train wreck if the tax cuts collide with a possible economic downturn could derail efforts to ensure the viability of the Social Security and Medicare systems before baby boomers retire in large numbers and put unprecedented strains on the system.

Rabbi David Saperstein, director of the RAC, said that by ramming through a massive tax cut now, Congress is missing a unique chance to deal with longstanding social problems.

"The surplus is a once-in-a-century opportunity to address the structural issues of poverty and inequality, of the environment and health care," he said. "But we're locking the surplus up in the tax cut."

And the projections offered by tax-cut backers, according to many critics, are based on last year's robust economy. A downturn could quickly cause the surplus to evaporate, and declining revenues would put unprecedented pressure on the government to slash discretionary spending -- which means almost all government-funded health and social service programs.

That means "real cuts in programs that provide vital social services," Saperstein said. "With these tax cuts and the commitment to expand military spending, there just isn't enough money to sustain or expand these programs."

Much of the impetus for the cuts is coming from congressional conservatives who want to dismantle what's left of the New Deal and the War on Poverty.

"Some of those who support the cuts don't want to see cuts in programs, but others are delighted to see the government forced to retreat from its role in providing a broad social safety net," Saperstein said. "This tax cut is a backdoor way of doing that."

As the tax cuts go online, Jewish service providers around the country, which use government money to supplement philanthropic dollars, could face an economic squeeze.

The United Jewish Communities (UJC), which provides the philanthropic component of much of that funding, is not publicly opposing the tax cuts, even though big government cuts would force UJC to pick up a bigger part of the tab for services.

"UJC took a position last November, before the election, that the surplus needed to be used for investment in health and welfare of people at need," said Diana Aviv, UJC's vice-president for public policy. "We still believe that; we worry when we see the current budget numbers."

But other sources say that UJC and other Jewish groups are fighting small skirmishes to protect key programs and prevent the harshest cuts.

Marshall Wittman, a senior fellow at the conservative Hudson Institute, rejected claims that the cuts would hurt the recipients of government-funded services.

"I'm very skeptical that this means government will be reduced significantly," he said.

Congress, he said, will actually increase spending even as it slashes taxes. "That's what we're seeing in the education bill now before Congress," he said. "We're now witnessing the greatest expansion of federal involvement in education since the Great Society."

And he said that if the economy turns sour, today's tax cuts could easily be reversed.

But opponents reject that claim.

"The only way to reverse it is to actually raise taxes -- which goes against the political grain today," said NCJW's Sammie Moshenberg.

At least one Jewish group is supporting parts of the big tax cut proposal. While taking no position on the overall package, the Orthodox Union last week welcomed the plan's "family friendly" provisions, including an increase in child tax credits and language intended to eventually eliminate the so-called marriage penalty.

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